From Spare Change to Real Change

CURRENCY

From Spare Change to Real

Change: The Social Sector as

Beta Site for Business

Innovation

by Rosabeth Moss Kanter

FROM THE MAY–JUNE 1999 ISSUE

W

inning in business today demands innovation. Companies that innovate reap

all the advantages of a first mover. They acquire a deep knowledge of new

markets and develop strong relationships within them. Innovators also build a

reputation of being able to solve the most challenging problems. That’s why corporations

spend billions of dollars each year trying to identify opportunities for innovation—unsolved

problems or unmet needs, things that don’t fit or don’t work. They set up learning laboratories

where they can stretch their thinking, extend their capabilities, experiment with new

technologies, get feedback from early users about product potential, and gain experience

working with underserved and emerging markets.

Today several leading companies are beginning to find inspiration in an unexpected place: the

social sector—in public schools, welfare-to-work programs, and the inner city. These

companies have discovered that social problems are economic problems, whether it is the

need for a trained workforce or the search for new markets in neglected parts of cities. They

have learned that applying their energies to solving the chronic problems of the social sector

powerfully stimulates their own business development. Today’s better-educated children are

tomorrow’s knowledge workers. Lower unemployment in the inner city means higher

consumption in the inner city. Indeed, a new paradigm for innovation is emerging: a

partnership between private enterprise and public interest that produces profitable and

sustainable change for both sides.

The new paradigm is long overdue. Traditional solutions to America’s recalcitrant social ills

amount to little more than Band-Aids. Consider the condition of public education. Despite an

estimated 200,000 business partnerships with public...